Cait Reilly, who is currently completing three weeks at Poundland, working five hours a day.
Photograph: David Sillitoe for the Guardian

Britain's jobless young people are being sent to work for supermarkets and budget stores for up to two months for no pay and no guarantee of a job, the Guardian can reveal.

Under the government's work experience programme young jobseekers are exempted from national minimum wage laws for up to eight weeks and are being offered placements in Tesco, Poundland, Argos, Sainsbury's and a multitude of other big-name businesses.

The Department for Work and Pensions (DWP) says that if jobseekers "express an interest" in an offer of work experience they must continue to work without pay, after a one-week cooling-off period or face having their benefits docked.

Young people have told the Guardian that they are doing up to 30 hours a week of unpaid labour and have to be available from 9am to 10pm.

In three such cases jobseekers also claim they were not told about the week's cooling-off period, and that once they showed a willingness to take part in the scheme they were told by their case manager they would be stripped of their £53- a-week jobseekers allowance (JSA) if they backed out.

The Guardian has also learned that lawyers are mounting a legal challenge to a separate work experience scheme known as mandatory work activity, which they argue represents a form of slavery under the Human Rights Act (HRA).

Cait Reilly, 22, is completing three weeks at Poundland, working five hours a day. Reilly, who graduated last year with a BSc in geology from Birmingham University, found herself with five other JSA claimants last week stacking and cleaning shelves at Poundland in south Birmingham.

She says there are about 15 other staff at the store but, unlike them, she will receive no remuneration for her work. "It seems we're being used as some free labour, especially in the runup to Christmas."

Reilly says she told her local jobcentre in King's Heath, Birmingham, that she did not need the experience in the store as she had already done plenty of retail work.

Despite DWP rules, Reilly says she was told by the jobcentre that she would lose her benefits if she did not take the Poundland placement. The DWP says jobseekers should be told about the cooling-off period but was unable to comment on individual cases without being given personal details."I was told [the work experience placement] was mandatory after I'd attended the [retail] open day," she said.

She said she felt she had to do it because "without my JSA, I would literally have nothing".

The work experience programme, which is separate from a multitude of other programmes designed to get people back into work, was advertised in January as voluntary after the time spent volunteering was increased from two to eight weeks.

However, the DWP has clarified that there is a clause which allows jobcentre case workers around the country to force unemployed people into placements. The DWP says that once people "express an interest", including verbal consent, in doing work experience they will lose their JSA if they pull out after their first week into the placement.

One big superstore told the Guardian it thought the entire scheme was voluntary and that people could pull out whenever they wanted without fear of penalty.

Under the scheme, there is no guarantee of a job, only an interview. Multiple jobseekers can work in one store at the same time, cleaning or stacking shelves and competing against each other for a potential offer of paid work.

The DWP has no overall figure for the numbers involved, so it is not known how many hundreds or thousands of young people are working without pay for months.

But including similar schemes such as mandatory work activity, sector-based work academies and the work programme, which is mainly run by private companies, the government expects hundreds of thousands of young people to do weeks of unpaid and forced work experience for big companies.

As part of her placement Reilly has been given training at another company, which will gives her a City and Guilds qualification in retail.

The DWP says Reilly is likely not to be on the work experience scheme but on another placement called a sector-based work academy, which was announced this October.

The scheme is different from straight work experience in that it has a defined training element, but Reilly says that it was only ever told that she was doing work experience and that her work at King's Heath branch of Poundland has been very unstructured.

"No one really knew what we were supposed to be doing. We were just put on the shop floor and told to tidy shelves," she said.James Rayburn has just spent seven weeks working for Tesco doing, he says, the same work as other paid employees.

He said he had gone to the jobcentre in search of employment, and the manager there had told him that Tesco was looking for staff.

"I thought, that's quite handy because I knew a friend who used to work there and it sounds like quite good fun."

Like Reilly, Rayburn, 21, said that he had little instruction from the store in Warfield, Berkshire. "I didn't actually have much support …They were getting on with their own jobs … they left me to it," he said. "They said, 'Good work today, Joe'. That was it, everyday."

Rayburn, who was also told by his jobcentre he would lose his benefits if he did not work without pay, said he spent almost two months stacking and cleaning shelves and sometimes doing night shifts.

"They said [my JSA] would be cut off if I didn't do it."

Asked if he thought he should have been paid, he said: "I reckon they should have paid me … I was basically doing what a normal member of staff does for Tesco. I had the uniform and I was in the staff canteen. I obviously got access to the food and drinks in the staff canteen … that's what they let you do … but I got nothing else apart from that."

" I was there doing it as if I walked into the store and said, 'Look I'll help'."

Like Reilly, Rayburn was not told that he had a week to refuse the placement. He was working at Tesco with two other young unemployed people who did get a job at the end of their placement.

Other large stores including Sainsbury's, Argos and Asda have been confirmed as providing work experience placements.

Solicitors from Public Interest Lawyers in Birmingham acting on behalf of two clients involved in the mandatory work activity programme have told the Guardian that they are seeking a judicial review of the scheme, arguing their clients were being forced to work against their will, amounting to a breach of their human rights under article 4 (2) of the HRA, which states: "No one shall be required to perform forced or compulsory labour."

Jim Duffy from PIL said: "Forcing jobseekers to work for free may benefit big business but does nothing to break the cycle of unemployment and poverty. Instead it amounts to exploitation, decided at the whim of a Jobcentre Plus adviser."

Tesco said 150 people had carried out placements at its stores in the past two months. However, it told the Guardian it was under the impression that work experience placements were totally voluntary.

It said it would not be offering placements over Christmas, adding: "These placements are not a substitute for full-time employees."

Poundland also confirmed the practice but said it did not have exact numbers.

Sainsbury's said: "Following an approach from their local Jobcentre Plus and in the belief that they were doing the right thing, a small number of stores have recruited colleagues under this new initiative.

"We have since reminded our stores that they must continue our normal work placement policy, which means they will take on candidates only when there is a chance of a permanent role at the end of the placement."

The employment minister, Chris Grayling, has defended the scheme, saying: "Our work experience scheme is proving to be a big success with over half of young people leaving benefits after they have completed their placement. It is not mandatory but, once someone agrees to take part, we expect them to turn up or they will have their benefits stopped.

"Work experience will give young people a real taste of the work environment and act as a stepping stone into a career. And it's working.

"Jobcentre Plus is working with major multinationals and smaller businesses to offer thousands of opportunities for young people so that they can start to get on the job experience whilst enabling them to keep their benefits."